Teucrium Corn Fund volatility increases on wide price movementTeucrium Corn Fund April call option implied volatility is at 29, May is at 27, August is at 28; compared to its 26-week average of 25 according to Track Data, suggesting large near term price movement.

White House willingness to extend negotiations with Iran White House willingness to extend negotiations with Iran on nuclear talks has sent WTI nudging back up over $48 bbl to $48.40, with the U.S. saying that as long as talks are still productive they will continue into Wednesday as today's deadline approaches. The White House described negotiations as "constructive," but it appears the markets have some doubts now, with the automatic nature of sanctions if Iran doesn't comply apparently a key stumbling block.

Treasury Action: back in quarter-end rally mode Treasury Action: back in quarter-end rally mode amid ongoing talk of a bit of a liquidity squeeze on GC, front-end, etc., along with the usual anticipation of index duration extensions into the close (why wait?). This should rebalance the books a bit for a fresh start to the quarter tomorrow heading towards the March jobs report on Friday, though forecasts are tilted toward the lean side on the jobs report. If so, that will keep the Fed sidelined a month or two longer. Meanwhile, the 2-year yield is at session lows of 0.555% compared to highs of 0.579%, while the T-note reversed from highs near 1.97% back down to a session low of 1.93%. The 2s-10s spread has dipped under +138 bp. Euro$ and Funds futures are marginally higher.

11:21 EDT

DA Davidson semicap equip analyst holds analyst/industry conference callSemicap Eqiupment Analyst Diffely provides an industry update and outlook on an Analyst/Industry conference call to be held on April 6 at 11 am.

TD Securities to hold a conference2015 Engineering & Construction Conference is being held in Toronto on March 31.

10:15 EDT

Treasury Action: yields steadied mid-range Treasury Action: yields steadied mid-range following the surge in consumer confidence after stretching out earlier, as bottom-fishing kicked in ahead of quarter-end inflows with stocks still in the dumps. The T-note at 1.95% is now between 1.935-1.970%. And there have been reports of solid demand at the short-end reportedly on liquidity concerns, with the 2-year yield holding down at 0.56%. The 2s-10s spread is still holding hear +128 bp.

10:00 EDT

Treasury Action: yields probed higher still Treasury Action: yields probed higher still after Chicago PMI rose, but came in below expectations. Consumer confidence is coming up and may not be very robust. With stocks opening lower, it appears that U.S. assets are for sale this morning. Some are crediting earlier remarks from former Fed Governor Warsh on CNBC warning of the dangers of market complacency vis the Fed as instrumental in the bearish tone. The T-note probed 1.97% session highs, while stocks are down about 0.5%.

U.S. Chicago PMI inched up 0.5 points to 46.3 in March U.S. Chicago PMI inched up 0.5 points to 46.3 in March, hardly unwinding the 13.6 point drop to 45.8 in February (which was the lowest since July 2009). The region's manufacturing sector remains in contractionary territory for a second month in a row. Prices paid were down on the month, as were supplier deliveries, while employment inched up, and new orders rose.

More from Lacker: he's not sure if he will dissent in June More from Lacker: he's not sure if he will dissent in June if the FOMC decides not to start hiking rates at that policy meeting, he told reporters after his speech. He will wait to hear what his colleagues have to say at that time. Once the Fed starts rate liftoff, he said officials have to be prepared to adjust the pace of tightening according to the incoming data, adding "analysts could tighten more rapidly than people expect." That's doubtful however, as the Yellen Fed has taken the dovish path every time there has been a Y in the road.

FX Action: USD-CAD retreated from two-week highs FX Action: USD-CAD retreated from two-week highs near 1.2785, falling under 1.2725 after the soft, but better than expected January GDP data. Lower oil prices will likely limit losses from here, as WTI crude remains under $48/bbl. Bids are seen into 1.2700, with resistance up at 1.2800, and 1.2834, which was the six-year high on March 18.

U.S. chain store sales climbed 3.4% in the week ended March 28 U.S. chain store sales climbed 3.4% in the week ended March 28 after dipping 0.7% the week before. That's the largest weekly gain since the December 20 week. But the y/y pace slowed slightly to a 2.9% y/y clip versus 3.0% y/y previously. This is a difficult period for sales because of the changing Easter calendar. Indeed, Easter is on April 5 this year, versus April 20 last year, and its proximity helped boost sales this past week. Warmer weather also enticed buyers of spring apparel.

Canada January GDP Preview Canada January GDP Preview: Analysts expect GDP to fall 0.2% m/m in January (median same) after the 0.3% rise in December. An as expected 0.2% drop would leave GDP on track for a 0.6% growth pace in Q1, which would undercut the BoC's 1.5% estimate. But Governor Poloz reiterated his view that the impact of the oil price shock is front-loaded, while also being upbeat on the manufacturing sector turn-around (thanks to lower CAD and ongoing U.S. recovery). Hence, an as-expected or more pronounced than projected pull-back in January GDP would not alter our outlook for an extended period of steady policy.

On The Fly: Morning Wrap-Up for March 31Globex S&P futures are recently down 8.20 from previous day’s SPX cash close. Nikkei 225 down 1.05%, DAX down 0.37%. WTI Crude oil is recently at 47.74, natural gas down 0.61%, gold at $1179 an ounce, copper down 1.46%.

FX Update: EUR-USD fell to nine-day lows FX Update: EUR-USD fell to nine-day lows under 1.0780, bringing the Mar-22 low at 1.0767 into scope. The move broke below the 20-day moving average, which is presently sitting at 1.0796 and now reverts as resistance, ahead of 1.0845. The fresh decline reflects broader dollar gains that were sparked by Fed's Fischer, who said U.S. GDP data may be understating the economy's health. USD-JPY rallied to a new high for a second day, making an 11-day peak of 120.36. The move came to a pause just shy of the 20-day moving average at 120.40. Cable has sunk back below 1.48s and looks set to test yesterday's 11-day low at 1.4752. The U.S. dollar also made advances on the dollar bloc currencies, with USD-CAD trading above 1.2700 and AUD-USD having dived to a 12-day low at 0.7619 amid expectations of a further RBA rate cut, either at the April or May policy reviews.

Treasury Closing Summary: Treasury Closing Summary: Wall Street was the big winner on Monday with hefty gains, following through on bullish enthusiasm from Asia and Europe, supported by more M&A news and hopes for more stimulus from China. The Dow climbed 300 points to retouch the 18,000 mark at one stage. Treasuries, on the other hand, posted small gains in quiet trading with curve steepening trades predominating, though the long-end was tamped down too heading into quarter-end duration extensions. The savings rate jumped after a boost in income and drop in spending, while the Dallas Fed index plunged thanks to the proximity of the oil industry.

14:40 EDT

Canada January GDP Preview Canada January GDP Preview: Analysts expect GDP, due Tuesday, to fall 0.2% m/m in January (median same) after the 0.3% rise in December. An as expected 0.2% drop would leave GDP on track for a 0.6% growth pace in Q1, which would undercut the BoC's 1.5% estimate. But Governor Poloz reiterated his view that the impact of the oil price shock is front-loaded, while also being upbeat on the manufacturing sector turn-around (thanks to lower CAD and ongoing U.S. recovery). Hence, an as-expected or more pronounced than projected pull-back in January GDP would not alter our outlook for an extended period of steady policy.

Averages remain near session highs in afternoon tradingStocks remain sharply higher and near their highs of the day in afternoon trading. The market jumped at the open following news of China's central bank being more open to take easing actions if needed as well as a flurry of healthcare related M&A news. The averages have moved in a fairly narrow range since finding a level early in the day, but with an upward drift. The move today is broad based but the Dow, which is up more than 1.5%, is the clear leader.

14:00 EDT

Treasury Option Action: some bearish positioning Treasury Option Action: some bearish positioning was reported, buying 15k in June 125 puts on 10-year futures. Earlier there was some bullish May 164/169 call spread buying on bond futures, as well as a 4k purchase of May 120/120.75 call 1x2 spreads on 5-year futures. June 10s are flat near 128-22 compared to a 128-245 to 128-14 session range.

13:45 EDT

U.S. Consumer Confidence Preview U.S. Consumer Confidence Preview: March consumer confidence is out Tuesday and should reveal a headline decline to 95.0 (median 96.5) from 96.4 in February. Michigan Sentiment has already been released for March and revealed a decline to 93.0 from 95.4 last month but the IBD/TIPP poll for the month managed to improve with a rise to 49.1 from 47.5.

13:30 EDT

U.S. corporate bond update: there is one last hurrahs U.S. corporate bond update: there is one last hurrahs for March issuance amid a light calendar today. Tlestra Corp is offering a $1 B 10-year note, and that's about it for the investment grade sector ahead of month- and quarter-end tomorrow. Over $30 B priced last week to bring the month's total to $178 B. This week's sales are expected to total about $10 B to $15 B. That's on the light side as the upcoming Easter holiday and Friday's jobs report impact.

12:20 EDT

Treasury's $48 B 3- and 6-month bill auction was lackluster Treasury's $48 B 3- and 6-month bill auction was lackluster. The $24 B 3-month bill stopped on the screws at 0.035%, which is a little cheaper than last week's 0.020%. Bids totaled $92.9 B for a 3.90 cover, better than last week's 3.78 but isn't quiet as good as the 4.17 average. Indirect bidders were awarded 26.3%, almost double the prior 14.5%, and better than the 20.8% average. The $24 B 6-month bill was awarded at 0.135%, tailing slightly from the 0.130% at the bid deadline. It's also a couple of basis points cheaper than the prior 0.105%. There were $86.7 B in bids for a 3.66 cover, not quite up to last week's 3.72 or the 4.16 average. Indirect bidders accepted 27.9% versus the previous 37.3% and the 36.3% average.

Dallas Fed's manufacturing index dropped to -17.4 in March Dallas Fed's manufacturing index dropped to -17.4 in March, after tumbling to -11.2 in February from -4.4 in January. It's a 3rd straight monthly decline and likely reflects a lot of the negative fallout from the drop in energy prices. Weakness was broad-based. The employment index fell to -1.8 from 1.3, an was as high as 12.0 in August. The wage component slipped to 15.6 from 16.8 previously, and is the lowest since November 2013. It was high as 26.8 in September. The workweek dropped to -5.3 from -1.6. New orders fell to -16.1 after dropping to -12.2 in February from -7.7 previously. Shipments dropped to -8.7 from -3.3. The 6-month business activity index slid to 3.0 from 5.5, having recovered from the -6.4 in January. The 6-month employment index doubled to 18.3 from 9.2, with wages at 34.2 from 37.2, new orders at 31.0 from 25.3, and capital expenditures at 7.5 from 14.0.

U.S. Dallas Fed Preview U.S. Dallas Fed Preview: The March Dallas Fed is expected to improve to -9.0 from -11.2 in February. Other measures of producer sentiment have weakened in March leading to our expectations for an ISM-adjusted average drop to 51 from 52 in both January and February as analysts discussed in Monday's commentary.

10:20 EDT

Treasury Action: yields continued to drift lower Treasury Action: yields continued to drift lower with quarter-end forces prevailing over the firmer round of NAR PHSI data, which was in turn trumped by a shortfall in personal spending. The T-note yield eased from 1.975% highs earlier to probe back below 1.95%. This has continued to keep pressure on the curve, which has narrowed to +137 bp.

Euro$ interest rate options: some put positioning Euro$ interest rate options: some put positioning was reported early, including the bullish sale of 10k in Front September 95 puts (5k outright and 5k covered). There was also a bearish purchase of 5k in Green September 78/81 put spreads, as a package with the Front September (covered) and uncovered 95 put sale. Underlying rate futures have been supported since the relatively dovish FOMC statement and the June 2015 is a half-tick higher near 99.67, while the deferreds are roughly a half-tick higher further out.

Today's U.S. income report Today's U.S. income report revealed firm Q1 personal income figures but disappointing spending data for January and February that left a rapid savings rate climb to a lofty 5.8% in February, as consumers remain oddly reluctant to spend the discretionary income freed up by plunging gasoline prices. The mix sharply lowered GDP growth prospects in Q1, and analysts lowered our Q1 GDP forecast to 1.3% from 1.8%. The downward bump in our Q1 GDP growth forecast after the 2.2% Q4 climb reflected a big downward revision in our Q1 real consumption growth forecast to just 2.0% (was 2.5%) after the 4.4% Q4 pace. Analysts expect 4.5% personal income growth in Q1 with the same 4.5% pace for disposable income, after recent respective mixes of 4.0% (was 4.1%) and 3.2% (was 3.3%) in Q4 and 4.2% and 3.6% in Q3. The benefits to growth from lower gas prices have been slow to materialize, just as other reports show Q1 headwinds from an inventory unwind, a petro-sector contraction, and bad weather.

09:17 EDT

FCC to hold a webinarThe FCC’s Office of Intergovernmental Affairs (IGA) is hosting a webinar for state and local governments that is designed to share vital information about Commission actions and priorities and improve federal, state, and local dialogue and information sharing on March 30 at 1 pm. Webcast Link

FX Action: USD-CAD posted better than one-week highs FX Action: USD-CAD posted better than one-week highs of 1.2656 into the North American open, moving higher as oil prices touched session lows. Crude prices have rallied back to $48.50, as USD-CAD now hovers just under 1.2650. Month/quarter end selling from domestic accounts had been noted at the end of last week, though this interest has likely been finished up. Liquidity may become an issue today and tomorrow, and as a result, sharp oil price movements could see some USD-CAD volatility.

Economic data has little effect on futuresStock futures remain sharply higher following the release of the personal income and spending reports for February. Personal income rose 0.4% versus expectations of a 0.3% gain, while spending rose 0.1% versus expectations of a 0.2% increase.

Canada Industrial Product Price Preview Canada Industrial Product Price Preview: The IPPI is expected to rise 1.0% m/m in February after the 0.4% pull-back in January. Gasoline prices saw a month comparable rebound in February versus January while the value of the CAD continued to erode, which should drive the IPPI higher. The RMPI is projected to rise 7.0% m/m in February as oil prices rebounded

The SEC to hold an open commission meetingThe Commission hears oral argument in cross-appeals by Francis V. Lorenzo and the Division of Enforcement from an initial decision of an administrative law judge who found Lorenzo violated the anti-fraud provisions in a meeting being held at SEC Washington, D.C. offices on March 30 at 10:30 am. Webcast Link

U.S. Dallas Fed Preview U.S. Dallas Fed Preview: The March Dallas Fed is out on Monday and is expected to improve to -9.0 from -11.2 in February. Other measures of producer sentiment have weakened in March leading to our expectations for an ISM-adjusted average drop to 51 from 52 in both January and February as analysts discussed in Monday's commentary.

U.S. Personal Income Preview U.S. Personal Income Preview: February personal income is out Monday and should reveal a 0.3% (median 0.3%) increase for the month with consumption up 0.2% (median 0.2%). This compares to respective January figures of 0.3% and 0.4%. Analysts expect the PCE price index to be up 0.1% with a 0.1% increase for the core as well.

The Michigan sentiment drop to an upwardly-revised 93.0 The Michigan sentiment drop to an upwardly-revised 93.0 (was 91.2) extended the February decline to 95.4 from the 98.1 cycle-high in January that marked the strongest reading since January of 2004, as the novelty of lower gasoline prices continues to dissipate. Analysts previously saw a steep six-month climb from a lean 81.8 in July thanks to plunging gasoline prices. Today's big upward Michigan sentiment revision further reversed the brief three-month period of downward revisions that ended in January, and reestablished the upward revision tendency of the prior two years. Analysts have an average upward revision of 1.2 in 2015, versus average boosts of 0.6 in 2014 and 1.8 in 2013. All of the various confidence gauges have declined into March from recent peaks, and analysts expect the consumer confidence index to slip to 95.0 in March from 96.4 in February and a 103.8 cycle-high in January, versus a slightly lower 93.1 in December. Overall, confidence is now oscillating in line with the growth trajectory of consumption and payrolls, as the pessimism of the current expansion that fueled remarkably weak confidence readings has slowly dissipated.

Euro$ interest rate options: some bullish positioning Euro$ interest rate options: some bullish positioning entered the mix, with a purchase of 2.5k in Green April 85/86 call spreads - with the grain of opening gains. Underlying futures have recovered some poise after yesterday's sell-off, as the June 2015 contract is 0.5-ticks higher ar 99.665, while the deferreds are 3-6 ticks higher out the curve.

Market opens with slight gainsStock futures weakened slightly toward the end of the pre-market trading session, but the market still managed to open with gains. The market did not react significantly to the GDP and personal consumption reports. Now only a consumer confidence reading can help it end its recent losing streak today. The market is set to have ts first losing quarter in the past six years.

09:15 EDT

U.S. equities are mildly lower U.S. equities are mildly lower in the wake of the unrevised 2.2% Q4 GDP reading and following mixed trade on stocks globally. The Dow is 35-points lower, S&P sank 3-points and NASDAQ is off 7-points ahead of the opening bell. Japan's Nikkei sank 0.95% after damp inflation and retail sales figures there, while the Euro Stoxx 50 is marginally weaker; Athens is up 0.45% ahead of Greece's reform list due Monday. Dow Chemical announced a divestment from its chlorine business, which will be merged with Olin for $5 B, surging 8% after the news. BlackBerry reported a surprise profit, along with a revenue miss. The approach of Fed Chair Yellen's speech on monetary policy at 15:45 ET should keep markets relatively cautious in the meantime. Final U. Michigan sentiment is next and seen revised up.

Stifel U.S. construction analyst holds analyst/industry conference callAnalysts, along with Kermit Baker, Chief Economist of the AIA and creator of the Architectural Billings Index (ABI), provides an outlook for the U.S. Non-Residential Construction industry on an Analyst/Industry conference call to be held on April 1 at 1:30 pm.

FDA Commissioner Hamburg to speak at a luncheon meetingDr. Margaret Hamburg, Commissioner of the FDA, speaks at a Luncheon Meeting being held at The National Press Club in Washington, D.C. on March 27 at 12:30 pm.

Treasury Market Outlook: Treasuries are little changed Treasury Market Outlook: Treasuries are little changed after a choppy overnight session. But the 10-year yield is holding just under 2.0%. Global yields are slightly higher with the Bund at 0.22% and the Gilt at 1.60%. The latter continues to underperform after BoE's Carney reiterated that the next interest rate move is probably higher. Stocks are mixed overseas while U.S. equity futures are in the red with Greece still a concern as Tsipras prepares to present details reform plans over the weekend. In other news, German import prices jumped 1.4% in February thanks to the weaker EUR and the rise in oil prices. On the U.S. docket today, comments from Fed Chair Yellen on monetary policy and the new normal are anexiously awaited, though she will not be speaking until later in the afternoon. Before that there will be data on revised Q4 GDP and the final print on consumer sentiment from the University of Michigan survey.

07:34 EDT

Federal Reserve Board Vice Chairman Fisher to speak at conferenceVice Chairman Stanley Fischer participates in a panel discussion at the Deutsche Bundesbank conference, "Debt and Financial Stability - Regulatory Challenges" being held in Frankfurt, Germany on March 27 at 6:30 am. Webcast Link

Treasury Closing Summary: Treasury Closing Summary: The bond market skipped a beat on Thursday after the big biotech sell-off and Yemen air strikes the day prior was followed by "deceased feline" bounce on beaten down stocks, which recovered some poise back to roughly unchanged from deep overnight losses. Moderates Bullard and Lockhart continued to lean towards rate hikes, which may have resonated as well, giving the dollar a lift from lows even as crude oil remained well bid. Initial jobless claims sank and Markit services flash PMI gained. Into this volatile mix, the 7-year auction results were relatively poor, which set up Treasuries for a fall and postponed quarter-end dip buying and a relief rally.

No immediate Saudi plans for a ground operation No immediate Saudi plans for a ground operation launch in Yemen are imminent, though its forces are "ready if necessary", according to a Saudi military spokesman. This follow reports that ground forces were preparing to enter after the air strikes softened up their targets. Recall, earlier reports that the Houthi leader had been killed seemed to be at the nexus of the stock market rebound from lows. Saudis also said that the Houthis will be cut off from supplies (presumably from Iran) until the operation ends.

14:15 EDT

U.S. equities have clawed back into the green U.S. equities have clawed back into the green though oil prices remain elevated and the dollar is on the rise again, which appear to be creating some headwinds along with the post-auction jump in bond yields. Yet investors of the high frequency and other varieties seem to be taking the inertial signals of the rebound in USD-JPY toward highs of 119.57 at face value for now. News that Saudi boots may follow air strikes on the ground in Yemen and that an all-Arab strike force in the region to intervene in regional security threats may keep uncertainty high, though this appears to keep U.S. involvement at arm's length in Yemen. Though the S&P 500 has managed to leap back above its 100-day m.a. at 2,057.3, it did crack a major trendline on the downside, drawn by connecting lows on a daily chart back to the major low on October 15 at 1,820.66.

Treasury Action: intermediate yields climbed Treasury Action: intermediate yields climbed on the back of the poor showing on the 7-year auction, though as expected the foreign demand came in above par. Jittery markets didn't appear to help this paper in this case, which tailed out with a subpar cover. The current 7-year yield cleared 1.79% from the 1.775% area in advance, compared to the 1.792% award rate on the new notes - all well above session lows of 1.69% when stocks were at their nadir ahead of the open. Stocks are now nearly back to unchanged and this was a factor as well for the sale. Above 1.79-1.80% there's a bit of a gap in the charts back to FOMC highs of 1.873%, but if that area holds along with the 2.0% area on the T-note and 2.60% on the cash bond, look for some relief to creep back in ahead of quarter-end all else equal.

13:15 EDT

Treasury's $29 B 7-year auction was another disappointment Treasury's $29 B 7-year auction was another disappointment. The note tailed to 1.792%, the cheapest of the day, versus 1.780% at the bid deadline. And it compares to last month's 1.834%. There were $67.2 B in bids for a 2.32 cover, below February's 2.37 and the 2.51 average. It is the weakest since May 2009 (similar to the 5-year). Indirect bidders accepted 50.5% also a little less than the 52.3% in February, but a little better than the 48.8% average. Direct bidders took 12.3% against 10.5% previously, while primary dealers were awarded 37.2%, unchanged from the prior 37.1%.

Treasury 7-year auction outlook: Treasury 7-year auction outlook: there's a cautious tone going into the offering, especially after yesterday's soft bid. Also, the note is expected to tail slightly, as has been a trend for this maturity, and given the recent price swings. The concession should help bring marginal buyers off the sidelines. The wi climbed over 4 bps to challenge 1.78% today and has been as low as 1.66%. Yet, a stop here would be the second richest since May 2013. On the positive side, the auction could benefit from concerns over geopolitical risks, as well as from month-, quarter-, and Japan's fiscal year-end flows. Sources also remind that the note has often rallied post auction into month-end. The February auction was on the soft side with a 1.834% stop, a 2.37 cover (2.51 average), but a solid 52.3% indirect bid (48.8% average). Direct bidders accepted 10.5%, while primary dealers were awarded 37.1%.

11:50 EDT

Saudies to strengthen border security Saudies to strengthen border security and security around oil and industrial facilities, according to their State News Agency SPA, following its air strikes in Yemen. That would seem prudent after escalation of its involvement in the near civil war of its neighbor. Meanwhile, WTI crude has stabilized over $50 bbl after pulling back from highs over $52.40. Yemeni President Hadi has left Aden for the Arab Summit, reportedly under Saudi protection, according to Al-Arabiya TV. Meanwhile, the White House was quick to preclude terrorism in the likely intentional downing of the Germanwings flight in the Alps, according to CNN reports.

Treasury 7-year auction outlook Treasury 7-year auction outlook: the $29 B sale completes this week's auctions after yesterday's poor 5-year sale offset Tuesday's solid 2-year offering. Traders contacted are concerned that today's results will be again be on the disappointing side. The wi trades at 1.765% which is the top of the range from a 1.66% low. Nevertheless, a stop there would be the second richest yield since May 2013, and that may be a limiting factor. These auctions also have a tendency to tail. On the other hand, risk-off flows could give some support, along with some front running of month- and quarter-end (fiscal year-end for Japan) trades. Barclays' estimates its index extension at 0.09 years. The note also often rallies after the auction into month-end. The February auction was on the soft side with a 1.834% stop, a 2.37 cover (2.51 average), but a solid 52.3% indirect bid (48.8% average). Direct bidders accepted 10.5%, while primary dealers were awarded 37.1%.

09:45 EDT

Treasury Option Action: a mixed bag Treasury Option Action: a mixed bag in early trade included bullish purchases of 1.5k in April 165/166 call spreads on bonds and 1k in May 121/121.5 1x2 call spreads on 5-year futures, along with a bullish "screen" sale of 3k in May 126/127/128 put butterflies on 10s. On the bearish side was a purchase of 1k in April 128 puts on 10-year futures. June 10s are 9-ticks lower near 128-17 compared to their 129-02 to 128-16 range so far.

House Appropriations Committee to hold a hearingThe Commerce, Justice, Science and Related Agencies Subcommittee holds an oversight hearing entitled, "Federal Investments in Neuroscience and Neurotechnology" with Executive Director of the Neurotechnology Industry Organization, Zack Lynch is being held on March 26 at 10:30 am. Webcast Link

Treasury Action: yields rebounded from lows Treasury Action: yields rebounded from lows though are stalling again before highs after the drop in initially jobless claims washed through, leaving the T-note yield back below 1.93% compared to the 1.9350-1.8903% pre-open range. The 2s-10s spread remains steady near +132 bp. Fedspeak from both Bullard and Lockhart confirms likely policy tightening ahead, though timing remains open ended and the markets should not be surprised by now.

U.S. initial jobless claims preview: U.S. initial jobless claims preview: jobless claims are expected to slip 1k to 290k (median 291k) in the week-ended March 21, while continuing claims are expected to fall to 2,345k from 2,417k for the week-ended March 14. Forecast risk is upward, however, as there is risk of rebounds as analysts pass holiday induced gyrations. preview for more.

08:05 EDT

N.Y. FX Outlook N.Y. FX Outlook: The dollar is broadly lower into the N.Y. open, with the unit continuing to correct recent strength. USD-JPY is on one month lows, after trading into 118.33, as EUR-USD rallied to levels last seen on March 6, peaking at 1.1052. Gold prices shot up to near $1,1220, while oil prices rallied 5% to over $52/bbl following news of Saudi airstrikes in Yemen. U.S. equity futures indicate another red open on Wall Street, which won't help dollar sentiment. On the calendar, weekly jobless claims are due at 8:30 EDT, with Markit flash March services PMI due at 9:45 EDT.

Treasury Market Outlook: risk off is the general theme Treasury Market Outlook: risk off is the general theme of action as Saudi Arabia and several of its neighbors attack rebels in Yemen. That gave Treasuries a bounce with the 10-year yield dropping to 1.88% from yesterday's rise to 1.92% after a poor 5-year auction and hawkish comments from the Fed's Lockhart. Core sovereigns are also posting small gains. The increased tensions in the Mid East have seen global equities decline as they follow the bearish tone from Wall Street where the Dow plunged 292 points yesterday. Data overnight showed a better than expected German GfK consumer confidence print and U.K. retail sales figures. Today's U.S. calendar includes the $29 B 7-year auction, the last of the week. On the data slate are initial jobless claims for the week ended March 21, the March flash Markit services PMI, and the KC Fed manufacturing survey for March. The aforementioned Lockhart will speak again on monetary policy and the economy, and his thoughts will be closely followed. Tomorrow's calendar has just revised Q4 GDP and the final print on consumer sentiment from the University of Michigan.

Market selloff appears set to continueStock futures are suggesting a sharply lower open as the market appears ready to continue yesterday's selloff. The futures may be reacting to reports that Saudi Arabia and its Gulf allies began bombing targets in Yemen as the country moves closer to a civil war. The news has caused a spike in crude oil prices and nervousness in Europe and the Middle East. Today U.S. investors will be watching the jobless claims reports and the natural gas inventory report for clues about the economy.

07:15 EDT

FX Update: USD-JPY dove to one month lows FX Update: USD-JPY dove to one month lows. News of the Saudi-led military intervention in Yemen saw oil prices rally and the dollar decline. USD-JPY led the way in forex markets, dipping below 119.00 for the first time in a month, while EUR-JPY fell to three-day lows. The spike in oil prices hit stock prices, and the yen gained amid its usual inverse correlation to risk appetite in financial markets. USD-JPY's 50-day moving average at 119.23 and the 200-day moving average at 118.85 were breached on route to a low of 118.33. Dollar losses against the euro were less pronounced. EUR-USD traded to a peak of 110.52, which according to our chart breached the Mar-17 post-FOMC high by one pip. AUD-USD, meanwhile, fell to a three-day low of 0.7801, taking out its 20-day moving average at 0.7818 on route.

Energy Action: The reported movement of Saudi troops Energy Action: The reported movement of Saudi troops to the Yemen border has likely been the main driver of the oil price spike this afternoon, as Reuters reports artillery and armor moving into defensive positions. The action comes as Yemen moves closer to civil war. NYMEX crude has rallied nearly $2.50/bbl from session lows, peaking at $49.43, and now eying the key $50 mark.

Treasury Action: intermediate yields backed up Treasury Action: intermediate yields backed up in the wake of the mixed results on the 5-year auction, leaving the current 5-year yield over 1.38% from the 1.37% area into the sale, compared to the 1.387% award rate and session lows of 1.34%. The 50% retrace of the 2015 swing arrives near 1.43%, which may attract initially.

12:45 EDT

Treasury 5-year auction preview: the auction should be solid Treasury 5-year auction preview: the auction should be solid, if the 2-year FRN results are any indication. Indirect bidders have continued to underpin demand most of this year, and that should again be the case today, especialy as many sovereigns with the same 5-year maturity are much lower in yield (the German 5-year trades at -0.076%). Indirect bidders took over 60% at the last two auctions. Also the note has cheapened a bit too, though it was after comments from the moderate Fed voter Lockhart that he'd vote for a rate hike by September at the latest, and that may scare off some potential buyers. The wi has risen to 1.38%, though it's still below the 1.435% on Friday, and it would be the second richest award rate since November 2013. The note is relatively cheap on the curve, with the 5s-30s spread narrower at 109 basis points versus 112 basis points at the start of the week. Also supportive is the record cash paydown for this week's offerings, so there's lots of cash to be put to work. Month- and quarter-end, and Japanese fiscal year-end demand could also trickle down to the belly. The February auction stopped at 1.48% and garnered a 2.54 cover (2.68 average) and a 60.1% indirect bid (53.7% average). Direct bidders took 9.5% last month with primary dealers taking 27.4%.

Treasury Option Action: bearish positioning Treasury Option Action: bearish positioning vs the 10-year has been the main trade of size, according to sources, in otherwise fairly tame conditions ahead of the 5-year auction later. Of note was a buyer of 7.5k May 128/127/126 put butterflies and the 127-00 strike targets a 25 bp move up in cash 10-year (2.135%), as the high yield for the year is 2.269% from the March 6 payroll swing, which roughly coincides with 126-00 on June 10s. Other smaller deals included a bearish buyer of 2k in May 124.5 puts and a bullish buyer of 3.5k in May 130 calls vs the sale of 1.75k in May 129 calls, and a bullish seller of 2k in May 127+ puts. June 10s are roughly flat near 129-025, compared to a 129-125 to 129-01 session range.

11:55 EDT

NASDAQ just prolapsed to -1.5% NASDAQ just prolapsed to -1.5% with wires citing ongoing sales of biotech shares. Note, the WSJ made a scathing attack on a "bubble" in biotech in today's paper, which apparently resonated with investors.

Euro$ interest rate futures are mixed Euro$ interest rate futures are mixed with the lead June 2015 a half-tick higher at 99.66, while the deferreds are lower by as much at a tick or two. The rate futures have essentially been on a gradual march higher ever since last week's less hawkish FOMC statement. Just in March alone, the December 2015 contract (Lockhart alluded to September in his NY Times interview), has gone from lows of 99.12 following the February payrolls jump to highs of 99.345 highs after the FOMC. That shows a shift from an 0.88% implied 3-month rate to 0.655% vs 0.700% presently, compared to the 0.00-0.25% Fed funds target range. Playing the lift-off game, that also assumes the Fed hikes by a quarter point to 0.5%, though presumably it could go 0.25-0.50% or to just 0.25% depending on the economic signals at the time. In the meantime it does seem clear that Q1 GDP continues to be revised lower by many economists as the firm dollar and weather takes its predicted toll.

Atlanta Fed's moderate Lockhart in an NY Times Q&A interview Atlanta Fed's moderate Lockhart in an NY Times Q&A interview said that he expected to vote to raise rates by September at the latest, though in his 9-years at the Fed he's never voted to raise rates. He was generally optimistic about the economy and saw 2.5-3.0% average growth ahead and gradual inflation rise to 2%. "Too much can be made of the lift-off decision itself because the really important factor is what's going to be the interest rate environment for the foreseeable future and to what extent is it going to remain accommodative, which I believe it will," he said. He also apparently gave "Atlanta Hawks" hats to Fisher and Plosser, but not himself since he couldn't find a team named "Centrists" or "Moderates." He's not 100% set on a hike by September (Fischer said "this year"), but "if analysts go beyond September, it would be because analysts were really disappointed in the stream of data that come in."

U.S. durable goods orders dropped 1.4% in February U.S. durable goods orders dropped 1.4% in February after a 2.0% January gain (revised down from 2.8%). Weakness was broad-based. Transportation orders fell 3.5%, with orders excluding transportation down 0.4% after a 0.7% decline previously (revised from a 0.3% gain). Nondefense capital goods orders excluding aircraft slid 1.4% lower versus January's -0.1% (revised from 0.6%). Shipments dipped 0.2% after falling 1.4% previously (revised from -1.0% originally), with nondefense capital goods shipments ex-aircraft up 0.2% versus -0.4% previously (revised from -0.3%). Inventories were up 0.3%. The inventory-shipment ratio edged up to 1.69 from 1.68. Data are much weaker than expected and should support gains in Treasuries while weighing on stocks and the dollar.

U.S. equities steadied above lows U.S. equities steadied above lows with Europe negative again on Grexit fears resurfacing. Durable goods orders fell 1.4% in February after a revised 2.0% rise in January, predictably surrendering some of its prior-month gains. In M&A, news of a $40 B mega-merger between Kraft and H.J. Heinz hit the tape, creating the third largest food and beverage corporation of its kind. That saw Kraft shares surge over 35% in pre-open trade after the purchase by 3G Capital and Berkshire. Kofax also surged 46% after agreeing to a merger with Lexmark. Stocks in Europe are down again with the Euro Stoxx 50 off 0.7% and yet Athens is 3.6% higher. In the U.S., the Dow is 18-points lower, S&P slid a point and NASDAQ is 2-points firmer in pre-market action. The WSJ is talking down biotech shares, which it claims could be fueling a "bubble" in the tech sector after a 240% gain in the sector since 2012 relative ot hte NASDAQ 100's 82% rise.

U.S. durable goods orders dropped 1.4% in February U.S. durable goods orders dropped 1.4% in February after a 2.0% January gain (revised down from 2.8%). Weakness was broad-based. Transportation orders fell 3.5%, with orders excluding transportation down 0.4% after a 0.7% decline previously (revised from a 0.3% gain). Nondefense capital goods orders excluding aircraft slid 1.4% lower versus January's -0.1% (revised from 0.6%). Shipments dipped 0.2% after falling 1.4% previously (revised from -1.0% originally), with nondefense capital goods shipments ex-aircraft up 0.2% versus -0.4% previously (revised from -0.3%). Inventories were up 0.3%. The inventory-shipment ratio edged up to 1.69 from 1.68. Data are much weaker than expected and should support gains in Treasuries while weighing on stocks and the dollar.

Energy Action: NYMEX crude was range bound Energy Action: NYMEX crude was range bound overnight, trading between $46.99 and $47.68. API inventory data reported on Tuesday revealed another U.S. stock build, rising 4.8 M bbls, and bringing total stocks to over 450 M bbls, an all-time high. EIA data will be reported at 10:30 EDT, where a 4.0 M bbl stock increase is expected. There has been talk lately of storage facilities being nearly full in the U.S., which is not a good sign for oil bulls, especially going into the spring refinery maintenance period, where crude demand will lessen. RBOB gasoline is steady over $1.81/gallon, while U.S. average retail gasoline is up a penny/gallon from Tuesday, at $2.42, according to AAA data. Natural gas futures are trading in the middle of their recent range, currently at $2.77/M BTU.

Treasury Market Outlook: Treasuries are little changed to higher Treasury Market Outlook: Treasuries are little changed to higher, extending gains for a 4th straight session. Core European sovereigns and most Asian bonds outside of Japan are also in rally mode. The 10-year yield has dipped to 1.86% in light volume. U.S. equity futures have headed south in tandem with European bourse as Grexit fears flare up again. There wasn't much data of note overnight. Korean Q4 GDP growth was unrevised at 2.7%. Germany's Ifo beat forecasts, rising to 107.9, while French business confidence unexpectedly dipped to 99. Today's U.S. slate includes the $35 B 5-year sale, and the $13 B 2-year FRN reopening. Durable goods for March highlight the data calendar. The MBA reported mortgage applications surged 9.5% in the week ended March 20. Earlier the Fed's Evans said the U.S. economy is very strong, but reiterated concerns over raising rates too soon.

On The Fly: Morning Wrap-Up for March 25Globex S&P futures are recently up 2.50 from previous day’s SPX cash close. Nikkei 225 up 0.17%, DAX down 0.20%. WTI Crude oil is recently at 47.58, natural gas down 2.06%, gold at $1190 an ounce, copper down 0.53%.

Treasury Closing Summary: Treasury Closing Summary: A rash of global and domestic data on Tuesday kept the markets guessing on the proximity of Fed rate lift-off, but the 7.8% surge in new home sales appeared to rattle stocks in the end along with a bounce in the dollar and uptick in core CPI. Perversely, that kept a bid in bonds and saw yields retreat to lows by session end. The 2-year auction results came in relatively strong, given solid foreign demand for the short-dated paper, which commanded a nice yield premium compared with negative yielding European paper.

15:04 EDT

Week of 4/4 Redbook to be released at 08:55

14:43 EDT

Market moves to session lows in afternoon tradingStocks have moved lower over the past two hour after spending the morning moving in a narrow range. The Dow broke its streak of days with triple digit moves yesterday, but appears ready to start a new one today with the average currently down about 90 points. Declining stocks are ahead of advancing stocks by 5:4 and oil prices, which were higher early in the day, were just pennies above the flat line this afternoon.

Wedbush healthcare analysts hold an analyst/industry conference callAnalysts, along with the Chief of Surgical Oncology at Texas A&M, hold an Analyst/Industry conference call on March 27 at 11 am.

13:20 EDT

Treasury Action: short yields nosed lower Treasury Action: short yields nosed lower following the solid takedown on the 2-year auction, which exceeded most of its benchmarks with the Fed seen procrastinating on rate lift-off and pulling in solid foreign demand with the 10-year Bund yield way down at 0.236% and the 2-year Bund taking -0.222%. The current 2-year yield eased from 0.577% in advance of the sale to 0.57% in its wake, but has since stabilized, compared to the 0.598% award rate on the new notes. Look for 0.532-0.625% nearby to define the next break for now.

13:10 EDT

Treasury's 2-year auction was solid and even better than expected Treasury's 2-year auction was solid and even better than expected. The note stopped through at 0.598%, after having richened to 0.600% at the bid deadline (and compares to last month's 0.603%). There were nearly $89.9 B in bids for a 3.46 cover, up a bit from February's 3.45 and better than the 3.39 average. Indirect bidders were awarded 45.7% versus lsat mont's 48.2% and the 33.7% average. Direct bidders took a big 18.3% from 13.3%, while primary dealers accepted 36.0% from 38.5% previously.

Bund vs T-note spread narrowing has been the rule in March Bund vs T-note spread narrowing has been the rule in March extending to the -168 bp area today after the 10-year Bund yield based under 0.17% on Friday and rebounded to 0.23% today, while the T-note yield essentially reversed out a month's worth of gains and has settled near 1.90% (from its March peak of 2.259%). This collapse in the spread accelerated following last week's more dovish leaning FOMC statement as the Fed acknowledged the strong dollar and sluggish exports did not leave the U.S. immune from slowing global growth. Back on March 9 analysts reckoned in our "Bund/T-note Elastic Stretched Strategy" that fading spread widening into the -200 bp zone would result in a retreat back to a more "normal" -175/165 bp and U.S. paper still appears to offer some relative value.

Today's U.S. reports Today's U.S. reports mostly beat estimates, with a big 7.8% February new home sales surge to a 539k cycle-high pace despite the big weather-hit to housing starts and lean February existing home sales. New home inventories fell to 210k in the face of the sales climb but hampered building, though the median price fell 4.8% to $275,500 as analysts further unwound the Q4 price spike. February CPI posted a sturdy 0.217% February rise alongside a 0.157% core price gain, as energy prices rebounded 1.0% after a huge 22.3% seven-month decline. FHFA prices eked-out a 0.3% January gain. A big Richmond Fed drop to -8.0 in March bucked other good news on the day, and joined other big Q1 producer sentiment declines to suggest a continued big inventory and mining headwind for factories.

U.S. Richmond Fed business activity index dropped to -8 in March U.S. Richmond Fed business activity index dropped to -8 in March after falling 6 points to unchanged in February, and is down from a recent high of 20 in October (and a record high of 27 from April 2010). But the guts of the report really weren't too bad. Weakness was seen in new orders which plunged to -13 from -2, and in shipments which dove to -13 from -1. But, the employment component rose to 6 from 4, wages were flat at 8, and the workweek improved to -4 from -6. Price trends picked up too, with the annualized change on prices received rising 0.62% from 0.32%, with prices received at 0.10% from 0.09%. The 6-month shipment index rose to 37 from 30, with employment nearly doubling to 23 from 12, and wages climbing to 31 from 23. The 6-month capital expenditures component increased to 32 from 27, while price trends showed prices received climbing to 1.53% versus 0.91%, and prices received at 1.09% from 0.48%.

Treasury Action: yields backed up from lows Treasury Action: yields backed up from lows following the much better than expected new home sales reading, though the third tier Richmond Fed index sank sharply following a rise in Markit flash PMI earlier. That's left the benchmark 10-year yield back above 1.90% compared to earlier lows near 1.895% and overnight highs of 1.925%. The 2s-10s spread remains tighter near +132 bp.

10:10 EDT

U.S. new home sales rebounded 7.8% to 539k in February U.S. new home sales rebounded 7.8% to 539k in February, much better than expected and the strongest since April 2008. Back months were revised with January boosted to 500k from 481k previously, while December's 482k was nudged down to 479k. Regionally, sales increased in the Northeast and South, and declined in the West and Midwest. The months' supply of homes fell to 4.7 from 5.1 (revised from 5.4). The median sales price declined 4.8% to $275,500 from $289,400 (revised from $294,300). The y/y pace slowed to a 2.6% rate from 7.3% y/y in January and December.

House Agriculture Committee to hold a hearingThe Subcommittee on Commodity Exchanges, Energy and Credit holds a hearing entitled, "Reauthorizing Commodity Futures Trading Association: End-User Views" with Director Campbell, Director Regulatory & Government Affairs, Constellation, an Exelon Company and President Christie of Cargill Cotton on behalf of the Commodity Markets Council on March 24 at 1 pm. Webcast Link

U.S. New Home Sales Preview U.S. New Home Sales Preview: February new home sales is expected to show a -1.2% decline to a 475k (median 470k) from 481k in January and 482k in December. The existing home sales release Monday missed expectations despite a 1.2% headline improvement to a 4.880 M pace from 4.820 M in January.

House Financial Services Committee to hold a hearingThe Oversight and Investigations Subcommittee holds a hearing entitled, "The FDIC's Role in Operation Choke Point" with FDIC Chairman Gruenberg on March 24 at 2 pm .Webcast Link

House Energy & Commerce Committee to hold a hearingThe Subcommittee on Health holds a hearing entitled, "Examining the 340B Drug Pricing Program" with the Deputy Administrator and the Asst Inspector General from the U.S. Health & Human Services Department on March 24 at 10 am. Webcast Link

FX Action: The dollar perked up FX Action: The dollar perked up following the in-line headline and slightly warmer core CPI data, taking EUR-USD from just under 1.1000 to 1.0936 lows, and USD-JPY from 119.35 to 119.68. Equity futures gave back about half of their modest gains, as yields inched up.

FCC Downloadable Security Technology Advisory Committee to hold meetingThe Committee holds a meeting where the Current Commercial Requirements Working Group and the Technology and Preferred Architectures Working Group report their findings on the competitive availability of navigation devices on March 24 at 10 am. Webcast Link

Energy Action: May NYMEX crude rallied Energy Action: May NYMEX crude rallied to near two-week highs of $48.34, as a further weakened dollar provided support. The rally came despite the unexpected drop in China's flash PMI to contractionary territory, and news on Monday that Saudi Arabia has no intention of cutting production. Resistance for the contract is now seen at $48.74, the March 12 high. RBOB gasoline has followed crude higher, trading to two-week highs over $1.82/gallon. Natural gas futures have edged up to $2.78/M BTU, from Monday's $2.73 close.

Senate Agriculture Committee to hold a hearingThe Committee holds a hearing entitled, "Waters of the United States: Stakeholder Perspectives on the Impacts of EPA’s Proposed Rule" will be held on March 24 at 10 am. Webcast Link

07:41 EDT

Standard & Poor's to hold a webinarWebinar entitled, "World Oil Prices Spilling Over the Investment Landscape" will be held on March 24 at 9:30 am. Webcast Link

07:40 EDT

Barron's to hold a summitTop Independent Advisors Summit is being held in Scottsdale, AZ on March 23-25.

Futures higher as market tries to get back on trackThe market spent yesterday digesting its gains from last week, but closed slightly in the red. The futures are higher in early trading today, as investors hope the market will get back to its winning ways. Today investors will be examining a consumer prices report, a housing price index, data on new home sales, and the Richmond Fed's manufacturing survey for clues about the economy.

06:32 EDT

China PMI reaches 11 month low, Reuters reportsHSBC's preliminary China purchasing managers' index came in at 49.2 for March, representing an 11 month low, according to Reuters. Economists polled by Reuters had forecast that the PMI would have a reading of 50.6, the news service stated. Reference Link

FX Update: The dollar found its feet FX Update: The dollar found its feet and traded firmer during the pre-European open session in Asia. EUR-USD settled to the low 1.09s during Asian trade after reaching a six-day peak of 1.0971 before capping out on Monday. Grexit risks continue to flow, with the latest swing for the worse as PM Tsirpas failed to unlock any emergency aid at his meeting with Chancellor Merkel yesterday, which put a lid on the euro. USD-JPY is lower for a third day, making 119.52 and bringing last week's one-month low at 119.29 into scope. That level markets support. A break would swing the 50-day moving average into scope and recent congestion levels around 118.62-119.11 into scope. A softer Nikkei today, following unexpected weakness in China manufacturing PMI data (down to 49.2 from 50.7 in the HSMC-Markit flash estimate for March), and weakness in Japan's version (which fell to 50.4 from 51.6), gave the yen an underpinning.

Treasury Action: yields are headed lower again Treasury Action: yields are headed lower again after Fed VC Fischer, the number 2 at the Fed, didn't suggest a rate hike as soon as June is in the cards. The market had pared opening gains amid risks Fed officials would not sound as dovish as implied in last Wednesday's FOMC results, and following the upward drift in European sovereign rates. The benchmark 2-year has dipped back to 0.57% after testing 0.59% earlier. The 10-year rate has slid to 1.91%, just off the lows of the session. The market is expected to remain range bound near term awaiting more information on the policy outlook, with a number of important data releases, though no one number will be definitive. Meanwhile, a heavy supply calendar should put a floor under yields.

12:35 EDT

Fed VC Fischer: a rate hike is warranted before year-end Fed VC Fischer: a rate hike is warranted before year-end and the Fed funds target will be set at each meeting based upon what members believe will best enable meeting both goals. He acknowledges, however, that the "benefits of global monetary accommodation may be offset by the appreciation of the dollar". Fischer sees NAIRU's approach and expects inflation will gradually arrise to target. He is concerned that extremely low rates will increase risks to financial stability, while ECB bond buying is putting downward pressure on U.S. yields. He is also concerned that the overnight repo has certain risks that could impact the structure of money markets, though use of supplementary tools will allow the Fed to raise short-term rates when appropriate. Fischer thinks the discussion should migrate towards the future path of interest rates, of which there remains considerable uncertainty. He is addressing the Economic Club of NY on "Monetary Policy Lessons and the Way Ahead" in this keynote speech as the wise second in command at the Fed. It's clear he's onboard with a hike, though he's blurred the lines on timing, similar to the last FOMC statement.

U.S. VIX backed up from Friday lows of 12.54 U.S. VIX backed up from Friday lows of 12.54 to trade tightly near 13.30 compared to its session range of 13.53-13.10. Friday's low marked the lowest level in equity volatility since December 12 and well below highs of 25.20 also that month set as Greek concerns and Fed exits were dominating the headlines. Now the Fed is backtracking and the S&P 500 at 2,111 is eyeballing historic highs of 2,119.6 set on February 25 again, well up from March lows of 2,039.69, which roughly bounced off its 100-day m.a. at the time that has now shifted up to 2,054.89 as a rising floor from 2,002 at the start of the year. The 200-day m.a. is still way down at 2,008. This could suggest some room on the upside near-term to mark fresh life highs, while equally growing risk of a sharp mean reversion should earnings catch down with dollar strength.

FX Action: USD-CAD dipped under last Thursday's low FX Action: USD-CAD dipped under last Thursday's low, basing at 1.2506, before bouncing over 1.2520. Standing bids are noted into the 1.2500 level. The pairing has followed the greenback's broad move lower, while WTI crude's move up toward $47/bbl has helped the CAD as well. Stops are noted under 1.2500, with next support coming in at 1.2450.

U.S. Producer Sentiment Stays Soft Into March U.S. Producer Sentiment Stays Soft Into March The winter drop-back in U.S. producer sentiment is extending into March despite a dissipating weather headwind, likely thanks to continued drags from an inventory unwind and a big mining sector hit. Declines in the already released Empire State and Philly Fed signal a March drop in the ISM-adjusted average for the major indicators to 51 from 52 in February and January, versus a sturdy 55-56 over the six months ending in November, as the remaining March reports likely capture some of the weakness in the early month reports.

Disappearing Fed hawks and other reasons Disappearing Fed hawks and other reasons for the dovish Fed shift last week were cited by WSJ's Hilsenrath in his Grand Central blog. Foremost among these was the retirement of Dallas Fed hawk Fisher and Philly Fed hawk Plosser, leaving their staffs to likely have submitted more "mainstream estimates" than their bosses with respect to the economic projections and dot-plots. In addition, he said that the data had moved away from the Fed, as had NAIRU, along with the surging dollar. Moreover, Yellen is more consensus-driven and in conversations with each voting member of the FOMC might have shifted the same direction, along with the need to collapse the growing divergence between market forecasts of future rate policy and their own.

Futures just below fair value ahead of openStock futures remain lower following the release of the Chicago Fed National Activity Index. The report had a reading of -0.11. A reading above zero represents activity above recent trend

Week Ahead - March Madness in Full Swing: Week Ahead - March Madness in Full Swing: Fed Chair Yellen underscored the "madness" in March as she and her team surprised with a more dovish stance than expected, which suggested rate liftoff at mid-year was unlikely. Thus the Fed remains in hyper-accommodative mode, and in line with other key central banks which are actively pursuing simulative policies. The markets went crazy as a result, with yields posting their largest declines in years, and in some cases hitting fresh record lows, while global equities had their best week in almost two years.

Treasury Closing Summary: Treasury Closing Summary: It was a friction free session on Friday, with no data and some typically mixed Fedspeak to chew over before the weekend. Doves implied that the post mortem on the FOMC decision was indeed that the rate lift-off could be anytime from June-September, giving stocks and bonds another leg up in the vacuum of quad-witching settlement on Wall Street. Investors weren't frightened off by the super moon eclipse, nor did they abandon their posts for the Vernal Equinox. The FX market remained jumpy, however, as the patience of dollar longs was again tested after Germany's Merkel reiterated that "Grexit" was not a viable option.

Fed's Fisher said the U.S. is the epicenter of world growth Fed's Fisher said the U.S. is the epicenter of world growth, in comments with Rick Santelli on CNBC. Fisher just retired after 10 years as the president of the Dallas Fed, and had been one of the more ardent hakws on the Committee. He's worried that the equity market is vulnerable to a significant market correction, fearing investors have become "lazy" and too dependent on Fed largess. He agreed the Fed has conditioned the makets, which are "hyper overpriced," while interest rates are abnormally low, as the Fed has injected enormous liquidity in to the system and floated all boats. But he also believes it's wrong to place the weight of the world on Yellen's shoulders. Investors will have to find their own ways to discount an eventual Fed rate hike. He continues to think the Fed should start that process sooner rather than later, and if he were in Yellen's shoes (heels), he's hike rates. But he wouldn't say how close the Committee might be to pushing the button.

Atlanta Fed dove Lockhart is concerned about money market funds Atlanta Fed dove Lockhart is concerned about money market funds that may have the potential to both cause and be hurt by financial instability. He is also keeping a close eye on the "shadow banking sector", which remains opaque and a potential source of contagion, though it may not need to be as closely regulated as banks. Voter Lockhart is speaking on "Banking and Prudential Regulation".

FX Action: Dollar losses continue FX Action: Dollar losses continue to rack up, seeing EUR-USD come up just short of the 1.0800 level, with comments from Germany's Merkel on no Grexit, and Greece saying it will stick to agreed plans supporting. Meanwhile, USD-JPY has slipped back under 120.80, after finding solid sellers over 121 overnight. USD-CAD is on session lows under 1.2665, as cable climbs to near 1.4900.

Treasury Market Outlook: Treasuries are little changed to slightly higher Treasury Market Outlook: Treasuries are little changed to slightly higher, supported by small gains in global sovereigns, as the markets look to end the week on the plus side. Global equities are also higher. There wasn't much action overnight. Grexit fears receded somewhat thanks to some progress in talks, but EU leaders remain adamant that there will be no further cash injections until Greece makes some real progress with the reform promises. German PPI inched up fractionally to -2.1% y/y from -2.2% y/y. Today's U.S. calendar will be highlighted by Fedspeak. Comments from Tarullo, Lockhart, and Evans will be anxiously awaited after the FOMC delivered a less than hawkish stance on Wednesday. Attention next will turn to upcoming supply with the $90 B in coupon auctions (Tuesday, Wednesday, Thursday), along with the 2-year FRN. Data next week include CPI, revised GDP, PMIs, various housing numbers, durable orders, and confidence.

FX Action: USD-JPY has been oscillating in the mid-to-high 120s FX Action: USD-JPY has been oscillating in the mid-to-high 120s following the recovery from Wednesday's post-FOMC dive to 119.29. A resistance zone is marked at 120.75-1.2110 (which encompasses former daily lows seen over the last 10 days). Support is at 120.34, which is the current position of the 20-day moving average, which has proven to be a pretty accurate support level over the last month (the post-FOMC breach was quickly reversed). Analysts think the bias will remain higher in the bigger picture, as the Fed and BoJ policy paths will remain contrasting ones into 2016. Analysts expect last week's a seven-and-a-half year peak at 122.03 to fall on route to the mid-125s.

The Philly Fed down-tick to a 5.0 one-year low The Philly Fed down-tick to a 5.0 one-year low from 5.2 in February and 6.3 in January left the measure well below Q4 readings of 24.3 in December and 40.2 two-decade high in November. The Philly Fed ISM-adjusted index fell to a 47.6 two-year low from 52.3 in February, versus a 58.8 ten-year high in November. Monday's February Empire State survey revealed a similar down-tick to 6.90 from 7.78 in February, while the ISM-adjusted Empire measure fell to 51.0 from 51.9 in February. Analysts expect a Richmond Fed rise to 1.0 from zero, a Dallas Fed bounce to -9.0 from -11.2, an ISM up-tick to 53.0 from 52.9, and an ISM-NMI downtick to 56.7 from 56.9. The mix should allow the ISM-adjusted average of the major surveys to slip further to a lean 51 from 52 in January and February, 53 in December, 55 over the four months ending in November, and a 56 cycle-high last July. Big declines in producer sentiment since November likely reflects an inventory pull-back, a petroleum sector hit to the mining-sensitive factory sector, and weather headwinds from a harsh winter.

U.S. leading index rose 0.2% to 121.4 in February U.S. leading index rose 0.2% to 121.4 in February, from an unrevised 121.1 in January. It's a 4th straight month that the index has been above 120, which hasn't been the case since late 2007. Seven of the 10 components made positive contributions, including the interest rate spread (0.21%), stock prices (0.10%), and building permits (0.09%), while jobless claims paced the components that declined (-0.14%).

Market can't build on Fed fueled rally, mixed in early tradingStock futures moved lower throughout the pre-market trading session, leading to a lower open for the broader market, though the averages have turned mixed in early trading with the Nasdaq notching small gains. The Dow has had triple digit moves each of the past eight trading sessions and its 80 point move in the early going has it close to extending the streak to nine. The market continues to digest the information from the Fed’s FOMC meeting and changes to its policy statement. Ahead of the next domestic data points, which include the leading indicators for February and the Philly Fed business outlook survey for March, the Dow is down 79 points, the Nasdaq is up 6 points and the S&P is down 7 points.

U.S. Philadelphia Fed Index Preview U.S. Philadelphia Fed Index Preview: The Philly Fed continues March's sentiment data where the headline is expected to improve slightly to 8.0 (median 7.3) from 5.2 last month. The already released Empire State index posted a decline for the month, easing to 6.9 from 7.8 in February. More broadly, analysts expect March sentiment to trend sideways with an ISM-adjusted measure of 52 for the month which would be the third month at this level.

JPMorgan medical tech analyst to hold an analyst/industry conference callMedical Technology & Devices Analyst Weinstein provides early insights in the drug-coated balloon (DEB) era, as well as discusses the outlook for adoption of the device, on an Analyst/Industry conference call to be held on March 19 at 10 am.

Treasury Action: yields inched higher Treasury Action: yields inched higher in the wake of the minor uptick in jobless claims and widening in the currrent accout deficit, but still inside yesterday's wild FOMC range. The T-note yield is consolidating near 1.95%, having bounced from Wednesday lows of 1.90% overnight, compared to 2.048% in advance of the Fed decision. Yesterday's low marked the lowest level since February 9, as Yellen successfully defused another potential taper tantrum after shedding "patient." The 2s-10s spread has stabilized near +135 bp, having steepened yesterday with the surge higher in front-end yields.

U.S. initial jobless claims rose 1k to 291k in the week ended March 14 U.S. initial jobless claims rose 1k to 291k in the week ended March 14, after a revised 35k drop to 290k in the first week of March (was 289k). That brought the 4-week moving average up to 304.75k from 302.5k (revised from 302.25k). Continuing claims fell 11k to 2,417k in the March 7 week, from 2,428k previously (revised from 2,418k). The BLS said there was nothing unusual in the data.

Energy Action: NYMEX crude retained a good chunk Energy Action: NYMEX crude retained a good chunk of its dollar sell-off driven gains on Wednesday, trading at $45.40/bbl in early N.Y., down from yesterday's $46.69 high, though well above the $42.50 level just ahead of the FOMC announcement. While the greenback remains off its best recent levels, oil prices may not have much more upside room, as crude supply remains abundant. The EIA on Wednesday reported a nearly 3 M bbl increase in storage at the Cushing, OK hub, which took stocks there to 54.4 M bbls, an all-time record high. Price support is seen at $44.30 now. RBOB gasoline trades at $1.7775/gallon, down from Wednesday's $1.82 peak, though well above the pre-Fed levels of $1.71. Natural gas futures are down slightly on the session, trading at $2.88/M BTU.

N.Y. FX Outlook N.Y. FX Outlook: The post-Fed dollar sell-off was brief indeed, with EUR-USD back on the 1.06 handle, after soaring over 1.1040 in late N.Y. trade on Wednesday. The story is similar for the other major dollar pairings, as USD-JPY trades over 120.50, and USD-CAD up over 150 points from its 1.2500 low. With regards to EUR-USD, the very crowded short trade was thinned out to a degree, though with ECB QE just getting ramped up, and economic sluggishness, and the Greece situation still to be resolved, the euro may now have an easier path toward parity in the coming weeks. Wednesday's short squeeze was long overdue. On the calendar, Q4 current account and weekly jobless claims data are due at 8:30 EDT, followed by the March Philly Fed index, and February leading indicators, both at 10:00 EDT.

07:31 EDT

Futures quiet following yesterday’s big advanceStock futures are trading near fair value following yesterday’s big advance. Yesterday’s move put the Dow back above 18,000, and for a short time the Nasdaq rose above 5,000 and the S&P traded above 2100. The Dow swung more than 300 points after the Fed dropped the word “patient” from its statement. Today investors will be examining jobless claims data, the Philadelphia Fed manufacturing report, and the natural gas inventory report.

Asian equities are mixed after the dovish Fed slant Asian equities are mixed after the dovish Fed slant was perpetuated by Yellen and boosted Wall Street, despite the surrender of the "patient" policy reference. Japan's Nikkei sank 0.65% after the Fed shift saw the yen rally sharply to a high of 119.66 at one stage before retreating back over 120 again. Though the Chinese yuan rallied 0.4% to a 2-month high through 6.20 against the dollar (compared to 6.2590 levels on Tuesday), the Shanghai Comp managed to eke out a 0.2% again on continued stimulus hopes. Biggest gainer among the Asian-Pacific majors was the Australian ASX, which gained 1.7% on global growth optimism as the Fed is apparently no rush to hike while the rest of the world is going the opposite direction.

17:00 EDT

Treasury Closing Summary: Treasury Closing Summary: asset markets rocketed higher after the FOMC more than offset the removal of "patient" via a statement that was more dovish than anticipated. The 10-year yield dove over 14 bps to test 1.09%, while the Dow turned a 100 point decline into a 227 point increase to regain the 18,000 level. Fed funds futures jumped as well as the risk of a June rate hike was lowered substantially.

Fed Swaps Patience for Pessimism: Fed Swaps Patience for Pessimism: The FOMC dropped "patient" like a hot potato, but said the change in forward guidance did not alter the timing of the first tightening and a hike in April remained unlikely. More generally, sizable downgrades in the growth and inflation forecasts, combined with an array of downward revisions for the "dot plot" rate forecasts, left a surprisingly dovish result for the markets overall. According to the Fed, "economic growth has moderated somewhat" thanks in part to slowing export growth.

U.S. Initial Jobless Claims Preview U.S. Initial Jobless Claims Preview: Claims data for the week of March 14th is out Thursday and should reveal a 290k (median 290k) headline, essentially the same as last week's 289k headline. Analysts expect claims to improve in March with a month average of 293k compared to a higher 306k in February and 294k in January.

Fed Chair Yellen on the stronger dollar Fed Chair Yellen on the stronger dollar: she doesn't have a firm quantitative estimate on the impact. But it should serve as a "notable drag on economic growth" this year. Nevertheless, the Committee still sees sufficient strength in the economy this year, and above trend growth going forward. With respect to how U.S. policy impacts globally, she said the Fed realizes that our own policies affect other economies and that analysts do spend time discussing global developments. She concluded by stating that it's important to keep our own house in order, and that a strong U.S. economy helps other economies as well.

FX Action: USD-CAD touched 1.2605 lows FX Action: USD-CAD touched 1.2605 lows, falling sharply from 1.2740 ahead of the Fed. The CAD got a benefit from not just the broadly lower greenback, but also from the sharp commodity rally which kicked in. Gold prices rallied over $20/ounce to over $1,170, as crude prices shot up nearly $3/bbl toward $45, from session lows just over $42.00.

Stocks rally after Fed drops 'patience' but reassures April rate hike unlikelyThe Federal Reserve's Federal Open Market Committee, or FOMC, dropped its longstanding assertion that it would be "patient" in deciding when to raise rates. Instead, the central bank said it would determine when to raise rates based on progress towards its two objectives: maximum employment and 2% inflation. "This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments," the committee said. The FOMC added that it is not likely to increase interest rates at its next meeting in April, and stated that when it does decide to raise rates, it will "take a balanced approach" that is consistent with its two goals. Moreover, the committee reiterated that, even after its goals are reached, it may elect to keep rates below normal levels for some time. On the economy, the FOMC stated that economic growth appears to have moderated in recent months, while inflation has declined further below its target, largely because of energy prices. The FOMC's members unanimously backed today's statement. Stocks have rallied off their lows after the Fed's release and ahead of Janet Yellen's press conference. In afternoon trading, the Dow is up 132 points, the Nasdaq is up 28 points and the S&P is up 16 points.

FX Action: The dollar slipped FX Action: The dollar slipped in the aftermath of the FOMC announcement and statement, taking EUR-USD to 1.0735 from 1.0640, and USD-JPY from 121.10 to 120.54 lows. Shorter yields fell back on the more dovish Fed take, while Wall Street turned moderate losses into moderate gains.

Fed wants 'further improvement' in labor market to raise ratesThe Fed said in today's statement, "The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term. This change in the forward guidance does not indicate that the Committee has decided on the timing of the initial increase in the target range."

FX Action: USD-JPY has put in a nearly one-week low FX Action: USD-JPY has put in a nearly one-week low of 120.87, with light stops reportedly kicking in on the move under 121.00. The pairing had been stuck inside of 121.10-20 since the N.Y. open. Ahead of the Fed, follow through is not expected, with talk of Japanese pension fund buying on dips noted.

11:25 EDT

Treasury Option Action: mixed flows are the rule Treasury Option Action: mixed flows are the rule in quiet pre-FOMC conditions, according to sources. These included bearish purchases of 2k in April 126.5/125.5/125 put butterflies and 5k in April 126/125.5 put spreads vs 10-year futures. And bullish purchases of 2.5k April 129/May 129.5 call diagonals and 10k May 129 calls vs a sale of 5k in May 128 calls, along with a sale of 5k in April 127 puts. June 10s are 9-ticks higher near 127-25 vs a 127-275 to 127-16 range with stocks lower into the Fed decision.

U.S. VIX just inadvertently plunged U.S. VIX just inadvertently plunged from highs of 15.87 to lows of 13.69 before rebalancing near 15.70 again, with details surely forthcoming. After predictions of increased volatility upon the lapse of "patience" by the Fed, this comes at a curious time ahead of the policy decision. That sent the VIX toward the lowest level of the month and is doubly dubious as a potential "fat finger" or "flash crash" trade as stocks opened lower, which should have supported vol.

09:45 EDT

Euro$ interest rate options: mixed positioning ahead of the Fed Euro$ interest rate options: mixed positioning ahead of the Fed decision follows yesterday's curve flatteners, with sources confirming a bearish purchase of 7.5k in Green April 77 puts and a bullish purchase of 2k in Front September 96/97/98 call butterflies. Underlying June 2015 futures are flat at 99.615, while the deferreds are 1-7.5 ticks firmer on the expectation that accommodation will remain part of the Fed's lexicon this afternoon given the economic pinch of the stronger dollar.

Stocks open in red as investors 'patiently' wait on YellenU.S. equity futures were weak throughout the pre-market trading session, leading to a lower open for the broader market. Investors are on Fed watch, awaiting the end of the central bank's two day meeting, and will be examining the Fed’s accompanying statement for any change in language that would suggest the beginning of interest rate increases. Investors will also be watching the weekly energy inventory reports at 10:30 am EDT as the price of oil continues slipping towards $40 a barrel. In early trading, the Dow is down 77 points, the Nasdaq is down 18 points and the S&P is down 8 points.

Altering Fed guidance is likely to lead to increased volatility Altering Fed guidance is likely to lead to increased volatility according to WSJ Fedwatcher Hilsenrath in his preview (subscription) of this afternoon's decision. That's the upshot if the Fed drops "patient" as expected, while IMF Director Lagarde has warned this could be akin to the "taper tantrum" episode that boosted rates briefly. Recent data has been deteriorating somewhat, however, which could complicate the decision. That may be reflected in the Fed's quarterly forecasts and rate projections as well. This could be accompanied by more vague language on interest rates after the "measured pace" guidance of the past was seen as a failure. They are not seen reversing their still accommodative stance just yet and should be clear to reassure that rates will remain below long-term averages for some time.

08:35 EDT

U.S. equities are back on the defensive U.S. equities are back on the defensive as the Fed wraps up its 2-day meeting today with fresh guidance about the policy outlook, which will attempt to walk the line between opening up the flexibility to hike rates this summer, but without committing to that act. NYMEX crude is 2.5% lower again into the low $42s. The Dow is 85-points lower, S&P sank 8-points and NASDAQ fell 15-points in pre-open action. In Asia, Japan's N-225 rose 0.55% and the Shanghai Comp added another 2.13% on stimulus hopes, while the Euro Stoxx 50 is 0.28% lower after Grexit fears rekindled. Adobe Systems sank 4.5% after a sales miss, while Oracle gained 2.2% after decent dollar-adjusted gains and a boost in its dividend. Alibaba's IPO lock-up expires on Wednesday, potentially leading to selling pressure. Fedex reported a 53% jump in earnings in Q4, benefiting from lower fuel prices and restructuring, though forward guidance disappointed. Citi and Barclays are expected to settle and FX trading lawsuit for $800 M.

Joint Economic Committee to hold a hearingThe Committee holds a hearing entitled, "The Economic Report of the President" with Chairman Furman of the Council of Economic Advisers on March 18 at 2:30 pm. Webcast Link

House Homeland Security CommitteeThe Subcommittee on Oversight and Management Efficiency holds a hearing entitled, "Unmanned Aerial System Threats: Exploring Security Implications and Mitigation Technologies" is being held on March 18 at 10 am. Webcast Link

U.S. Commodity Futures Trading Commission to hold a public roundtableThe CFTC holds a Roundtable on Cybersecurity & System Safeguards Testing to review system safeguards testing requirements, including potential enhancements to further strengthen the resilience of futures exchanges, clearing organizations and swap data repositories and is being held at CFTC Washington, D.C. offices on March 18 at 9 am.

07:30 EDT

Treasury Market Outlook: Treasuries are modestly higher Treasury Market Outlook: Treasuries are modestly higher, in sync with gains in core sovereigns overseas. The 10-year note yield has slipped to test 2.02%, the lowest since late February as the market sees little prospect of an overly hawkish Fed. U.K. Gilts are the outperformers of the session with the rate down over 7 bps to 1.601% after dovish MPC minutes and disappointing jobs data. That's brought the spread to the Treasury note to the lowest since mid 2006. Concurrently, Germany saw a strong 10-year Bund auction. European bourses are mostly lower as Grexit fears flare up again, and are weighing on U.S. equity futures. In the U.S. today, it's all about the FOMC. The policy statement, the economic projections, and Yellen's presser are all awaited for insights on the timing of rate lift-off. Today's data calendar is thin. The MBA reported mortgage applications fell 3.9% in the week of March 13. The only other item today are oil inventories.

FX Update: Sterling dove while other the majors stuck to narrow ranges FX Update: Sterling dove while other the majors stuck to narrow ranges ahead of today's FOMC's announcement. The pound fell on sub-forecast labour market data and dovish-leaning BoE minutes from the early March MPC meeting. Cable breached the Mar-12 trend low at 1.4699 on route to logging a low of 1.4656, while EUR-GBP extended recovery gains from last week's seven-year low. EUR-USD, meanwhile, remained in close orbit around 1.0600. USD-JPY continued to trade in a narrow range in the 121s for a fourth consecutive trading day in Tokyo. The Nikkei stock index's rally in to 15-year high territory hasn't had much impact on the yen over this time. Japanese pension funds have reportedly been buying USD-JPY, but exporters have been sellers, and speculative and hedging accounts have been trimming dollar long exposures into the FOMC. This leaves USD-JPY in a consolidation phase after making a seven-and-a-half year peak early last week at 122.03.

Japan's trade deficit narrowed to -424.6 B yen (nsa) in February Japan's trade deficit narrowed to -424.6 B yen (nsa) in February, from -1179.1 B yen in January, and versus -665.2 B yen in December. A deficit has been posted for 32 consecutive months. February exports climbed 2.4% y/y after a 17.0% y/y surge in January. It's a 6th consecutive monthly gain. February imports dropped 3.6% y/y, extending the 9.0% y/y January decline, and helped by falling energy prices. And it looks like the Bank of Japan's ultra aggressive accommodation is bearing fruit, and especially as the yen weakens. USD-JPY has climbed to 121.30 from 105.92 back in October.

Treasury Closing Summary: Treasury Closing Summary: Treasury yields backed up from lows especially at the short-end as the Fed prepares to lose "patience" with its policy guidance, having probed lower at the open thanks to fresh wobbles in Europe and opening equity declines. That resulted in some flattening on the coupon and rate futures curves as investors simultaneously positioned for more cautious economic guidance and forecasts. After a weaker than expected reading on German ZEW, housing starts plunged 17% thanks in part to the deep freeze on the east coast, though this was largely shrugged off while on standby for the FOMC decision tomorrow.

FX Action: USD-JPY touched a session low of 121.11 FX Action: USD-JPY touched a session low of 121.11 in the immediate aftermath of the weak housing starts outcome this morning, since climbing to highs of 121.34. FX trade has been uninspiring overall today, with USD-JPY being no exception. The dollar continues to hold its own, despite the weaker risk backdrop, and lower U.S. yields, though until the FOMC announcement on Wednesday, narrow trading ranges can be expected to prevail.

FOMC Outlook: the FOMC has begun its 2-day meeting FOMC Outlook: the FOMC has begun its 2-day meeting. Policymakers are still widely expected to remove "patient" from its policy statement on Wednesday, despite the weaker than expected data of late (with the exception of employment numbers). However, analysts expect Chair Yellen will play down the rate hike implications of such action. The FOMC is also expected to revise down its 2015 growth and inflation forecasts to also temper fears over lift-off, as should some narrowing in the "dot-plot" estimates. Look for Yellen to stress that the policy path remains data dependent, and note that there is still slack in the labor market. She is also expected to be quizzed on the weakness in oil prices and the stronger dollar and their implications for growth and inflation.

U.S. corporate bond update: a couple of issuers are jumping in U.S. corporate bond update: a couple of issuers are jumping in ahead of the FOMC. BMG tops the list with a $2 B 5-year auction. Washington Prime Group has a benchmark 5- and 10-year offering. Masco Corporation launched a $500 M 10-year. Sweden has a benchmark 5-year on tap. ONEOK Partners is selling $600 M in 5s and 10s.

Euro$ interest rate options: mixed positioning into the FOMC Euro$ interest rate options: mixed positioning into the FOMC meeting remains in vogue, including bearish purchases of 10k in Blue September 70/75 put spreads vs the sale of 10k in Short September 88/91 call spreads. Also, there was a bullish purchase of 5k in Short June 88/90/91 call butterflies on top of 12k purchased yesterday. In block trade there was a bullish purchase of 10k in Short June 88/90/91 call butterflies, totaling 20k all day and 32k over the past two sessions. Underlying June 2015s are flat at 99.615, but the deferreds are as much as 8-ticks higher out the curve as the market gets increasingly comfortable with the glacial thaw in zero rate policy.

House Committee on Oversight and Government ReformThe Committee holds a hearing entitled, "FCC: Process and Transparency" with FCC Chairman Wheeler on March 17 at 10 am. Webcast Link

08:55 EDT

U.S. equities have retreated with Europe U.S. equities have retreated with Europe, while the 17% fall in housing starts may buy more time at the Fed on the launch of tightening, with the WSJ already warning that the Fed outlook has become clouded by the dollar surge and signs of slowing in the U.S., though much of the plunge appeared weather-related. Stocks reversed gains in Asia after the BoJ left QQE policy unchanged and German ZEW survey gains were smaller than expected relative to the euro's dramatic declines in March. Greece remains in the news as well after Fin Min Varoufakis appeared to alienate Germany once too often and PM Tsipras may negotiate directly now with Germany's Merkel and EU Summiteers. The Dow is 55-points lower, S&P fell 6-points and NASDAQ is off 2-points in pre-open trade, fractionally lower after the weak housing print. This followed a 0.99% rise in Japan's Nikkei and a 1.04% fall in the Euro Stoxx 50.

Futures lower but housing data has little impactStock futures moved lower prior to the release of the housing starts and building permits data for February. Housing starts were down 17% versus expectations of a decline of 2.4%, while building permits were up 3.0%, versus expectations of an increase of 0.5%. Futures did not react significantly to the data.

Canada Manufacturing Shipments Preview Canada Manufacturing Shipments Preview: Analysts expect shipments to fall 1.0% in February after the 1.7% gain in January. Export values plunged 2.8% in January, tilting the risk for January manufacturing to the downside. An as-expected or larger pull-back would fit in with the oil shock story, so the report should not necessarily challenge the Bank of Canada's growth outlook.

Treasury Market Outlook: Treasuries are wearing the green Treasury Market Outlook: Treasuries are wearing the green, paced by gains at the long end as the 10-year yield falls to 2.04% amid risk-off trades. That's in contrast to declines in most Asian in European sovereigns. Trading remained light. Stocks are lower on profit taking after the Dow gained 228 points yesterday, with selling motivated by a smaller than forecast rise in the German ZEW confidence index. There are ongoing concerns over Greece. Crude oil continues to stumble lower. The BoJ maintained a steady policy stance. The RBA minutes showed policymakers are open to another rate cut as AUD is still viewed as overvalued. The FOMC begins its 2-day meeting today. Data is thin today with just February housing starts, and weekly retail sales.

FX Update: The dollar majors maintained relatively narrow ranges FX Update: The dollar majors maintained relatively narrow ranges as market participants wait for the FOMC announcement and press conference on Wednesday. EUR-USD managed to lift back to the 1.06 area after dipping to a low at 1.0551. USD-JPY has continued to ply a range in the 121s. An as-expected no change in policy from the BoJ and boilerplate remarks from Governor Kuroda at the post-meeting press conference had little impact on the yen. The Nikkei closed with a 1% gain, closing just off new 15-year highs. Regarding the Fed, there is widespread anticipation that it will drop the word "patient" at his week's FOMC policy review, though analysts think that the statement will emphasize that the timing of a rate hike will be data dependent, which in the event could spark a short squeeze on the dollar.